Aalborg Universitet
The Emancipatory Potential of Ecological Economics: A Thermodynamic Perspective on Economics, Space and Sustainability
Takeda, Louise
Publication date:
2002
Document Version
Publisher's PDF, also known as Version of record Link to publication from Aalborg University
Citation for published version (APA):
Takeda, L. (2002). The Emancipatory Potential of Ecological Economics: A Thermodynamic Perspective on Economics, Space and Sustainability. Department of History, International and Social Studies, Aalborg University.
General rights
Copyright and moral rights for the publications made accessible in the public portal are retained by the authors and/or other copyright owners and it is a condition of accessing publications that users recognise and abide by the legal requirements associated with these rights.
- Users may download and print one copy of any publication from the public portal for the purpose of private study or research.
- You may not further distribute the material or use it for any profit-making activity or commercial gain - You may freely distribute the URL identifying the publication in the public portal -
Take down policy
If you believe that this document breaches copyright please contact us at vbn@aub.aau.dk providing details, and we will remove access to
The Emancipatory Potential of Ecological Economics:
A Thermodynamic Perspective on Economics, Space and
Sustainability
Louise Takeda
DEVELOPMENT RESEARCH SERIES RESEARCH CENTER ON DEVELOPMENT AND INTERNATIONAL RELATIONS (DIR) WORKING PAPER NO. 108
INSTITUTE F OR HISTORY, INTERNATIONAL A ND SOCIAL STUDIES
© 2002 Louise Takeda
Research Center on Development and International Relations (DIR)
Aalborg University
Denmark
Development Research Series Working Paper No. 108 ISSN 0904-8154
Published by
DIR & Institute for History, International and Social Studies Aalborg University
Distribution
Institute for History, International and Social Studies Secretariat, room 106
Fibigerstraede 2
DK-9220 Aalborg East Phone + 45 96 35 83 91
E-mail: kramer@humsamf.auc.dk
Lay-out and wordprocessing Jette Jensen Al-Naseri
Centertrykkeriet, 2002
The Secretariat
Research Center on Development and International Relations att: Secretary Marianne Hoegsbro
Fibigerstraede 2 Aalborg University DK-9220 Aalborg East Denmark
Tel. + 45 96 35 98 10 Fax. + 45 98 15 32 98
E-mail: hoegsbro@humsamf.auc.dk or jds@humsamf.auc.dk Homepage: www.humsamf.auc.dk/development
The Emancipatory Potential of Ecological Economics: A Thermodynamic Perspective on Economics, Space and
Sustainability
*Louise Takeda**
Abstract
There is a growing consensus that the modern path of development is leading humanity down a dangerously unsustainable path. Mass production and consumption have led to unprecedented changes in the natural environment while, at the same time, inequality is exploding both within and between nations. Until the recent rise of ecological economics, the sustainability concept has been largely restricted to economic criteria. However the physical aspects of material and energy flows often determine the actual ecological and social impacts resulting from economic activities. With this situation in mind, the following thesis examines the insights which a thermodynamically based ecological economics can contribute towards a new understanding and style of development, based on principles of ecological and social sustainability.
The thermodynamic principle is applied to three different theoretical approaches within ecological economics. The first approach focuses on the biophysical dimensions of economic activity. The physical insights revealed are then combined first with a world systems approach to development, and subsequently with a dialectical approach to spatiality and social life. Each of the approaches is used to inquire into different aspects of the complexities of the human-nature interaction, the roots of socially and ecologically unsustainable practices, and the economic, social or political responses necessary to move in a more sustainable direction. The engagement is largely critical and deconstructive, seeking to problematise many basic assumptions within the dominant neo- classical approach to economics and development, and put them into a new theoretical and strategic context.
The hope is that this paper can contribute, on the one hand, towards an understanding of the need for a thermodynamically based critique of political economy; and on the other hand, the need to firmly situate thermodynamic economic analysis within a broader framework of social and political power relations.
* Masters Thesis - May 2002
** Graduate Master Student at Research Center on Development and International Relations, Aalborg University, Denmark.
Introduction
As the social question dominated industrial society until the middle of [the last] century, so does the ecological question now occupy central place.
(Elmar Altvater 1993: 230)
At the beginning of the twenty-first century, environmental issues are appearing everywhere as deeply contentious political issues. Since the early days of the industrial revolution, humans have mined the earth, stripped the forests, and filled the biosphere with an array of toxic wastes, all in the name of progress and development. While all living things take resources from nature and deposit wastes, humans have elevated this process to the point where numerous living organisms and whole ecosystems are no longer able to adapt. The depletion of energy and materials in the last half a century accelerated to such an extent, that more energy was consumed during those years than in the whole preceding history of humanity. While a few people have attained material abundance through this process, resource depletion and environmental degradation now endanger many and affect the future of all of us. In the past, belief in progress has allowed people to turn a blind eye to the negative effects of their decisions on others and on the environment. Now, in our global information age, it is becoming increasingly difficult to ignore the serious and increasing ecological and social threats which human societies are facing. The persistence of poverty amidst rising disparity between rich and poor, along with visions of impending global ecological collapse, are leaving more and more people wondering about the direction and wisdom of current developments.
An increasing number of people worldwide are realising that conventional modern development is leading humanity down a disastrously unsustainable path. Of course, with widely different economic positions, interests, needs, and aspirations, this realisation is not the same as a consensus on what needs to be done. In the meantime, nearly all nations continue to strive for more material goods. Whether these goods are essential for survival or trivial materialism is not an issue. Economic growth remains a main policy goal of all governments, and is seen as necessary not only to meet the welfare need of its citizens, but also to combat the growing threat posed by ecological problems. Dissident voices, who argue that economic growth within a global market system may reinforce rather than solve the conditions of poverty and environmental degradation, have been regarded as fairly marginal to the real issues- at least up until now. Serious attempts to come to terms with the issues underlying the current environmental crisis is calling into question some very basic assumptions within the ‘mainstream’ traditions of economics and development.
The following thesis examines the insights which a thermodynamically based ecological economics approach can contribute to an understanding of the complexities of the ecological impacts of human actions, the roots of unsustainability, and the direction towards a more sustainable path of development. Before introducing the basic premises of ecological economics and main focus of the inquiry, we will take a brief look at the concept of development and the mainstream approach to solving the environment- development dilemma.
1.1 The development debate - a short history
The concept of development holds within it a noble intention – it represents the hope that people all over the world will move towards reason and progress in an effort to improve the living conditions and welfare of all. The roots of development can be traced back to the European Enlightenment, but it was only after the second world war that development as an official plan was launched globally (Sachs 2000: 161). Both North and South were in agreement that development was positive and desirable. In its simplest version, development was seen to be a linear process, and contained an image which was decidedly European and American. Its initiators in the North saw it as a necessary condition for world peace, since economic upheaval following the great depression was seen as a major cause of the outbreak of war in Europe. In the South, after extended periods of humiliation during colonisation, development was seen as a way to join in with the modern world (Ibid. 162).
During the latter half of the 1940’s and 1950’s, various conceptions of development appeared1. While the concept is not necessarily synonymous with economic growth, conventional development is defined above all economically, where human welfare is measured primarily by the level of production. Signs along the development path include increased saving and investment, higher material productivity, industrialisation, urbanisation, use of modern technology and eventually high mass consumption (Sutcliffe 1995: 233). A catching up or modernising perspective has dominated development thinking, holding out the promise that developing countries could basically follow the same path as the developed countries. In addition, development has been largely perceived as mutually beneficial to both developed and developing countries (Hirschman 1981 in Ibid. 233). Development has thus been thought of as a positive-sum game where both developed and developing countries could get a bigger slice of the growing cake, even if the relative size of the pieces stayed the same. This modernising perspective, with economic growth as the core feature of development, has survived debates and analysis to this present day.
However, a central and controversial question revolving around the issue of mutual benefit has dominated much theoretical debate.2 Supporters of mutual
benefit assumed that development would take place in basically capitalist economies, though there was disagreement as to the optimal level of state intervention. Some even concluded that development could take place in socialist systems, though it certainly was not considered a necessary condition.
On the other hand, there were a number of theories which clearly rejected mutual benefit. While they differed on certain points, they all agreed that development in the South was not possible through a capitalist system and integration in the world economy. A compelling argument which gained ground in the 1960’s was the idea that underdeveloped countries had been made underdeveloped by the success of the developed ones (Frank 1966). Rejecters of the mutual benefit perspective thus advocated some degree of disconnection from the world economic system as a requirement for development in Southern countries (Amin in Sutcliffe 1995: 234). They did not reject the goals of development as such, but believed an alternative socialist route was necessary to get there.3
While there were many areas of profound disagreement between rejecters and acceptors of mutual benefit, there were nevertheless some important points of agreement. Both sides, for example, saw development as desirable, and both agreed on a close connection between economic aspects of development, especially rising production and productivity, and meeting of basic needs and human welfare (Ibid. 237). In addition, while the obstacles to development were perceived very differently by the two sides, neither side considered that the limits of the physical environment might pose an obstacle to universal development. However, as the 70’s approached, it became clear to many that none of these schools, in their original forms, were entirely capable of interpreting and explaining the causes and dynamics of (under)development.
Moreover, not everyone shared positive associations with the process of development, and a growing critique of development arose.
Before proceeding, it should be said that conventional development has had some marked successes such as rapid economic growth, advanced technological progress, and increased levels of consumption, and has also diminished certain problems related to poverty in the South. Likewise economic growth in the North has, in some cases, contributed to an improved local environment. At the same time however, other problems have arisen and grown in severity as a result of development activities. For some, the problems caused by development appeared to outweigh the benefits gained.
Two broad critiques developed, which can be generally termed as the welfare and environmental critiques. On the one hand, the proponents of the welfare critique pointed out that development had not led to general welfare, and may overall produce negative consequences for human welfare. Such arguments were
supported by statistical evidence which revealed that the gap between rich and poor had widened; that poverty, hunger and disease persisted or had got worse;
and that the majority of people in most Southern countries were living in greater hardship than at the time of decolonisation (Sachs 1993; Sutcliffe 1995). In addition, women, indigenous people, and small farmers argued that their basic needs and rights were either not met or were threatened by development.
Concerns were also raised regarding the materially and culturally defined values and goals of modern development, which were seen to enhance unequal power structures and destroy non-western cultures (Shiva 1989; Sachs 1993). The focus turned towards grassroots movements and the empowerment of local people as a radical alternative to top-down development.
Still the ultimate challenge to the conventional development paradigm appeared to come from the environmental critique. The environmental critique pointed out in a very precise way the contradictory nature of development. It arose initially from a growing awareness of problems relating to such things as air and water pollution, electric fields, nuclear power plants, and pesticides. Then came the Limits to Growth report (Meadows 1972) which predicted the eventual exhaustion of the material resources on which development was based. The resources pointed to were primarily non-renewable mineral resources such as oil and valuable ores. However statistical data also revealed that since the 1950’s, a third of arable land world wide had been seriously degraded, and around one quarter of tropical forests, fresh water and fish reserves had disappeared, in addition to the historically unprecedented rate of animal extinction (Sachs 2000:
166). These findings were followed by the discovery of the ozone hole, and concern over climatic and other environmental changes which suggested that the future of humanity itself could be under threat. The process of development, tied to the ideal of economic growth, appeared to be outgrowing the earth’s capacity.
Costs previously shifted to future generations, geographically remote areas, or less advantaged groups were beginning to affect the day to day lives of the Northern developed world. To a growing number, the rules which guided two centuries of economic growth appeared to be reaching their limit.
While all of these arguments had been present in economic debates for more than a century,4 environmental concerns did not make much of an impact on development debates until the end of the 1980’s. The response varied, from those who called for a halt to economic growth and a radical reorganisation of social life (e.g. Daly 1991), to those who argued that the environmental problem confirmed the need for more and rapid economic growth (World Bank in Sutcliffe 1995: 240). Others, who took biophysical limits seriously, still believed that environmental factors could be taken into account within a somewhat more complicated, but basically unchanged approach. Rather than seeing environmental problems and continuing poverty as signs of failure of economic
growth and development, they were taken up as challenges to be overcome by technology and good management.
1.2 Sustainable development and environmental economics
Environmental problems were once commonly believed to be solvable in isolation from social issues, but this changed with the arrival of the influential Brundtland Report (World Commission on Environment and Development [WCED] 1987). The report suggested that eradicating poverty was an important issue for environmental sustainability, and a new emphasis was placed on concerns over growing polarity of world income (UN Development Program in Peet and Watts 1995: 2). The report pointed out that poor people are often forced to destroy their immediate environment in order to survive. However, it did not go so far as to inquire into any political or economic interests which may cause or perpetuate poverty, or acknowledge that many poor peasants may be living in sustainable ways. Rather, poverty was regarded as a naturally occurring or an “original state of being” (Bryant 1997: 6), which eliminated the need to search elsewhere for its ultimate causes. Economic growth, along with population control, was therefore seen as necessary to help the poor escape
“their” problem. Poverty thus became “the moral justification for advocating ‘a new era of economic growth’” (WCED 1987 in Ibid. 7). Nevertheless, it was also acknowledged that a lot of current economic activity is unecological in its effect. Problems identified were basically the same as those named by the environmental critique, that is, that economic activity was causing pollution, using up scarce resources, disturbing ecosystems and destroying habitats.
However, there was disagreement as to what the ultimate cause of these problems was. For environmental economists, environmental problems were seen to arise not as a result of economic activity as such, but rather due to the fact that many environmental goods are not priced.
Environmental economists, therefore, do not consider it necessary to radically reform the discipline of economics, and argue that its prime concern is already the study of the allocation of scarce resources. They do however call for a refinement of tools and methods, and greater attention to environmental inputs and outputs of the economic system (Pearce in Hayward 1995: 90).
Environmental problems are seen as examples of “market failures”, that is, cases where markets fail to achieve their otherwise predicted socially optimal result.5 The central problem is that environmental goods appear to be provided for free, and therefore more of them are demanded than if they had to be paid for. The outcome of this overuse results in external environmental or social costs which are imposed on third parties – what economists euphemistically term
“externalities”. The first step to correcting this problem is then to calculate the market value or “shadow price” of these environmental costs and benefits (Jacobs 1997). This is done by defining the consumers’ average willingness to
pay for benefits or avoid costs. Once the value of these external costs are defined, they can then be “internalised” or brought back within the market by raising prices of damaging activities through taxes, charges, tradable permits and so on (Ibid. 371). By using a single measure of monetary value, costs and benefits can be compared to one another. Assuming then that prices have been correctly calculated, total environmental damage will be reduced to the point at which marginal costs equal marginal benefits.
While this argument reveals some important deficiencies in conventional economics, not everyone has been convinced that the environmental problem can be solved by “getting the price right”. For a start, there are a number of practical problems with pricing externalities, for example present values have to be assigned to unknown future costs, and the preference of future agents’ cannot be known. Prices are also influenced by the distribution of property rights, income and power in social-institutional terms. For example, if people damaged are relatively powerless and poor (or unborn), then externalities will be valued lower relative to market goods6 (Martinez-Alier 1996: 157). In addition, prices also reflect individual preferences, and therefore show a strong bias towards selfishness as opposed to collective preferences or the common good (Røpke 1999: 45). There are also many things we do not know and probably never will know about many environmental externalities, and of those we do know about, their effects may be perceived as positive by one group and negative by another.
Moreover if values are given with reference to the ends the valuer has in mind, then whose preferences are to count? And can an interdependent ecosystem be divided into individual pieces which can be measured by price?
The list of problems concerning monetary evaluations goes on,7 but there are also more fundamental questions of principle. For example can or should all things in life be valued in money terms, or are some things beyond exchange value? Can things of different sorts of value be measured and compared with one measuring rod? It has also pointed out that when societal decisions concerning the environment are based on conventional economic rationalising, a one-dimensional monetary value is applied to problems which are multidimensional in scale. Moreover, by reducing all things to their market value, the activities and processes that are not monetised or do not involve cash transaction get undervalued. Things in nature which are useful for production are considered to be of environmental concern, while all else falls by the way side. With such a range of concerns and false assumptions uncovered, Martinez- Alier concludes that “monetary values given to externalities appear as a consequence of political decisions which are themselves often based on spurious economic arguments” (Martinez Alier 1999: 31).
1.3 Ecological economics and implications of energy flows
In addition to political and social critiques, ecological economists argue from a more scientific nature that mainstream economic approaches have failed to understand the physical dimensions of ecological problems. Ecological economics arose in response to the inability of orthodox economics to adequately cope with ecological issues (Martinez-Alier 1999: 25). For more than a century, individual scholars have tried to introduce the issues addressed by natural science into economics, but have been systematically rejected (Martinez- Alier 1987). It was not until the 1980’s, with the formation of the International Society for Ecological Economics, that ecological economics became recognised as an academic field of inquiry. Its basic premises are that the economy is embedded in the ecosphere and that the earth has a limited capacity for sustainably supporting people (Wackernagel 1999: 13). It encompasses diverse patterns of thinking with multiple disciplinary roots, which allows the
“bigger picture” to come into view. Ecological economics can be described as
“an attempt to correct the tendency for ecologists to ignore humans, and the social science world to ignore nature” (Costanza et al. 1997: 48). It is a system science which studies groups of interacting interdependent parts linked together by complex exchanges of energy, matter and information. This is in contrast to
“classical” sciences which are based on the reduction of phenomena into isolatable events, and the search for basic “atomic” units or parts of the system (Ibid. 51). Costanza points out that while reductionist approaches are appropriate in cases where interaction between parts is non-existent, weak, or essentially linear, they are insufficient to understand complex living systems such as ecological and economic systems.
Among the major influences on the development of ecological economics were Howard T. Odum’s Environment, Power and Society (1957) and Nicholas Georgescu-Roegen’s The Entropy Law and the Economic Process (1971). Odum was concerned with material cycles and energy flow in ecosystems and produced one of the first energy flow descriptions of a complete ecosystem (Odum in Costanza et al. 1997: 59). Georgescu-Roegen is best known for his work on entropy and economics, and his theory continues to create controversy among economists, in part because it challenges strongly held beliefs about progress. Another influence was Kenneth Boulding’s The Economics of the Coming Spaceship Earth (1966), which describes the transition from “frontier economics” where growth in human welfare implies growth in material consumption, to “spaceship economics” where growth in welfare can no longer be pursued through growth in material consumption. This view was further elaborated by Herman Daly (1977, 1991) and his work on steady-state economics, where he argues that the economy cannot continue to grow in a materially finite and non-growing ecosystem, and ultimately must reach some form of sustainable steady state. Finally, Richard Norgaard’s (1994)
coevolutionary understanding of the unsustainability of modern society explains how development based on fossil fuels has allowed individuals to control their immediate environment for the short term while shifting environmental impacts to more distant places and future generations.
Despite these alternative paradigms, ecological economics is not a single paradigm based in shared assumptions and theory, and beyond the level of generalities there is no consensus of formalised principles (Wackernagel 1999).
While the field has been deliberately kept conceptually pluralistic, there is generally a preferred paradigm used by individual ecological economists. The perspective of interest for this inquiry is based on the proposition that ecological economic studies must be grounded in biophysical assessments. While this is self-evident for some, it also contradicts a significant amount of work in the field (Ibid. 14). The starting point for analysis is the unidirectional and irreversible physical flows of energy from nature, through the economy, and back in degraded form (Rees 1999a: 31). Its thermodynamic foundation for economic activity points to the physical costs of the very act of production and consumption. This makes it fundamentally different from the market model of environmental economics. Understanding the physical/material transformations that bind the economy and ecosystems, combined with knowledge of complex systems theory and systems ecology, is seen as vital to resolve ecological problems.
A convenient and easily understood ecological economics tool for quantifying the human use of nature and assessing sustainability is the ecological footprint8 (Wackernagel and Rees 1996). It measures the amount of biologically productive space necessary for a given population to produce the resources it consumes and to absorb the corresponding waste it generates. The purpose of the ecological footprint is to illustrate the possibility of exceeding biophysical limits or demonstrate its actual occurrence, and also to evaluate potential strategies to avoid it. In addition however, data from ecological footprint analysis also reveals the glaring inequality in the use of environmental goods and services by the North and South. At present, the wealthy 25% of humanity living in OECD9 countries can be seen to occupy a footprint as large as the entire biologically productive surface area of the earth (Sachs 2000: 167). This means that whole countries survive by appropriating the carrying capacity10 of an area of land vastly larger than their own physical territories (Rees 1999a: 36).
Therefore while such countries appear economically prosperous in their trade balances and national accounts, they are running massive “ecological deficits”
with the rest of the world (Ibid. 36). The problem of course is that in a closed space with finite resources, not everyone can be net importers of biophysical goods and services. The overconsumption of one party must necessarily be
compensated by the underconsumption of another if the world is to maintain some degree of ecological stability.
This has profound implications for development thinking. Previous development assumptions have assumed that economic growth in the North and South is the only practical means to alleviate poverty, address material inequalities between countries, and provide resources for resolving environmental problems.
However with the global economy already running a massive hidden ecological deficit,11 the amount of ecological goods and services available are inadequate to satisfy even present demand let alone increased demand (Sachs 2000: 167). To the extent that limited access to resources is a cause of poverty, the environmental overconsumption of the rich has an enormous bearing on the possibilities for achieving sustainable development.
1.4 Problem statement
The conventional stance of neo-classical economics maintains that development, primarily in the form of economic growth, will provide the conditions necessary to alleviate poverty and resolve material inequalities. However, after a half a century of economic growth, inequality has increased while the environment has been drastically transformed. It appears that the conventional vision of development, of access for everyone to the benefits of industrialisation, is lacking not only the necessary social and political basis but also the material base for its realisation. For many, this new reality marks an historical turning point in economic development, requiring a reorientation of goals and values, and a radical transformation of the way people relate to the earth and one another. In regards to this problem, this investigation asks:
Can a thermodynamically based ecological economics provide the basis for an alternative understanding and style of development, which is both consistent with ecological limits and strives to ensure a basic level of wealth and resource equity?
In order to approach this problem, ecological theory will be combined with social and development theory. However, care must be used when applying an ecological perspective to political relations, since ecology can and has been used for different purposes. It has, for example, been equated with “lifeboat ethics”
and “the survival of fittest”, and in the political arena, it has upheld hierarchical control as a “natural” state of affairs, or as a necessary means to safeguard certain aspects of nature. Therefore it is important to be clear about the main elements of sustainability in order to avoid such restrictive understandings. In the next section, the main structure, assumptions and arguments of the investigation will be reviewed.
2. Methodology
A frequently cited quoted from Harvey states that “all ecological projects (and arguments) are simultaneously political-economic projects (and arguments) and vice versa” (Harvey in Bryant 1997: 82). What this means is that ecological arguments are never socially neutral just as socio-political arguments are never ecologically neutral. If one accepts that there is no “value-free science” in relation to environmental and development issues, then it is essential to identify the values underlying a particular study. This applies especially to studies on sustainability, which inherently contain a normative element reflecting the particular sets of relationships which are of value to the author.
With this in mind, the three main elements,12 considered to be essential requirements for the achievement of socio-ecological sustainability,13 in this study are:
(1) ecological stability which requires that the natural generative and assimilative capacities of ecosystems/ecosphere are not exceeded by consumption and production of wastes by the economy;
(2) social sustainability which requires that society satisfy basic standards of material equity, and strive for a fair and equitable distribution of resources for all its inhabitants; and
(3) supportive socio-political institutions which requires that actions taken by institutions contribute to the potential, interest and diversity of people’s lives without undermining their own productive abilities or independence
Each of these definitions is based on a set of assumptions or value judgements.
In the first case, the definition of ecological stability is based on the assumption that the earth is a thermodynamically closed and complex system, where fundamental uncertainty is large and irreducible, and certain processes are irreversible (Costanza 1997). This takes into consideration the laws of thermodynamics, complex systems theory, deterministic chaos and systems ecology.
The requirement for social sustainability is based first and foremost on the ethical assumption that the wealthy do not have the right to appropriate a vastly disproportionate share of the world’s finite resources. It is considered unacceptable that a quarter of humanity should live in abject poverty while another quarter lives in lavish material comfort. The argument put forward in the Brundtland Report is also relevant - that is, in a highly unequal world, the rich can be so rich that they do not worry about their own progeny having enough, and the very poor can be so poor that, at least in some cases, they will need to exploit resources and degrade the environment just to survive. In addition, social
sustainability is seen necessary to ensure future peace and security, since increasing disordering of regional ecosystems and the ecosphere can be expected to contribute towards the breakdown of civil order and increasing turbulence in the world political situation (Rees 1999a: 46).
Lastly, supportive socio-political institutions, as defined above, are seen as necessary in order to avoid a reductionist methodology which neglects social or cultural contexts and poses a threat to local communities and their lifestyles (Sachs 1993: 19). At a more basic level it questions whether modern institutions are themselves sufficient to meet the requirements of ecological and social sustainability.
Social sustainability and supportive socio-political institutions are social science concepts relating to the progress of human systems, and their requirement can be seen as broadly responding to the welfare critique of development. Ecological stability is based on scientific principles and its requirement can be seen as a responding to the environmental critique of development. While the welfare and environmental critiques overlap and share many arguments, they are also distinct from one another, both conceptually and in terms of the problems they identify and solutions recommended (Sutcliffe 1995: 241). For example, a certain understanding and process may provide a remedy for the environmental crisis, but fail to improve or even worsen the situation of the deprived. On the other hand, a process which strives to satisfy basic standards of material equity may, at the same time, increase stress on the environment, or destroy local cultures and communities. Therefore, these three requirements for ecological stability, social sustainability, and supportive socio-ecological institutions are presented together with the hope that a combined response to the welfare and environmental critiques of development might be found.
The structure for the theory section reflects three approaches within ecological economics for applying the thermodynamic principle to an understanding of human-environmental systems and interactions. The first section of the theory takes a purely physical approach to ecological economics based on thermodynamics. It focuses on the biophysical dimensions of economic activity, emphasising the material and energy dependency of all economic production and consumption activity with its physical environment. Three interrelated themes of primary concern are entropic irreversibility, environmental scarcity, and the problem of intergenerational economic justice. Overall, it provides an important critique of the failure of neo-classical economics to adequately theorise the biophysical basis of economic activity. In particular, it presents a strong case for entropic constraints to economic expansion, thereby challenging conventional economic growth theories.
While this thermodynamic critique of economic activity is extremely important, it is in itself not enough to take up the challenge of sustainability. It is also necessary to recognise that the transformation of physical materials and energy occurs through the medium of socio-ecological structures (Jacobs 1996:14).
Therefore in addition to a biophysical understanding of economic activity, the sociological and political bases of economic activity must also be understood. In defining strategies to address socio-ecological problems, ecological economic analysis must be able to take into consideration injustices in terms of access to environmental resources and services, bearing the risks of industrial pollution, or the control over environmental management priorities. These are political and material problems related to social, cultural, and economic domination (O’Connor, M. 1994: 5). The question of who retains the benefits and who bears the costs is fairly obviously a matter of power. Therefore, in order to gain a more complete understanding of environmental problems and meaningful action concerning their resolution, ecological economics must be situated within a broader theoretical framework.
The second and third sections of the theory therefore present two approaches which combine the biophysical dimensions of economic activity with political ecology.14 Political ecology, like ecological economics, integrates natural and social science approaches in an attempt to understand the relationship between human and ecological systems. However, in contrast to some forms of ecological economics, the concept of power is central to political ecology. As its name suggests, politics is of primary importance, and its rapid development since the mid-1980’s can be seen as a response to the apolitical nature of mainstream approaches (Bryant 1997: 6). The classic definition of political ecology is that it combines the concerns of ecology and a broadly defined political economy (Blaikie and Brookfield in Ibid. 8). Political economy, unlike classical or neo- classical economy, situates the inquiry of wealth creation in a broad consideration of power dynamics of the social institutions involved in these economic processes (Bowles and Gintis in M’Gonigle 1999: 12). One of the primary concerns of political ecology is therefore the impact of unequal power relations on the nature and direction of human-environmental interactions. The combination then of ecological economics with political ecology provides the theoretical framework for understanding how the nature and direction of energy and material flows relates to unequal power relations; that is, how the thermodynamic principle operates at institutional and larger social/cultural levels (Ibid. 14).
One way to understand the role of power in human-environmental interactions is by focussing on the environmental result of these interactions, where the physical environment is seen as a manifestation of power relations (Bryant 1997:
13). This is the approach taken in the second section of the theory, which is
based on the ambitious attempts by Richard Adams (1975) and Stephen Bunker (1985) to quantify power in terms of control over energy flows. This is a very interesting approach in that it shows how unequal power relations may be
‘inscribed’ in the environment, both natural and human made, as well as in the resulting forms of social organisation and institutions. It takes as its starting point the internal dynamics of extractive and productive economies, and the interaction between them in a global market system, in order to show how systematic ratios of exchange and energy appropriation are at the foundation of modern industrial development and social hierarchies. By combining a world systems approach to development with an analysis of geographical flows of energy and matter, Bunker builds an ecological history of geographical uneven development.
This understanding of the social transfers of energy and matter in the creation of unequal exchange provides some very important insights into the problem of under/over development. There are however some deficiencies in the theory, corresponding largely to a post-structuralist critique of (neo) Marxist analysis. Its conception of power is insufficient to capture the many intangible forms of power and cannot, for example, explain how weaker actors may be able to resist or retain any power in situations of highly unequal power relations (Bryant 1997:
14). Moreover, the source of power is conceived mainly in economic terms, which disregards other manifestations of power occurring in a wide variety of material and non-material interaction. While the overall understanding of the creation of power through the appropriation of energy and resource flows is extremely valuable, a more inclusive understanding of power, taking in its multi- dimensional interplay with human-environmental systems, would be beneficial in order to facilitate more creative responses.
The third section of the theory, therefore, also builds on a thermodynamic critique of economic systems and political ecology, however its focus on power is expanded to consider the generalised dynamics of various modes of organising power. Sustainability is related to the growth and extension of centralist hierarchies of all types including but not limited to those sustained by market- based institutions (M’Gonigle 1999: 14). Its starting point is a dialectical understanding of spatiality and social life. Power is seen as having a geographic or physical component, which is largely consistent with a world systems analysis. However it is also seen as an “omnipresent tendency” which exists in the social consciousness and organisation of all things and acts of everyday life (Ibid. 17). The challenge then becomes to transform a range of centralist hierarchies which are unsustainably removed from people and places. Taking in post-structuralist considerations of space, knowledge, institutions, and development, as well as insights from regional planners, philosophical anarchy, and community-based development, this critical inquiry is open to a much broader area.
The goal however is not to elaborate a new universal theory for achieving sustainability, but rather to provide a kind of compass to orient future alternatives in a clearer manner. Different societies are quite obviously subject to different cultural and historical processes, and have different sets of economic and social practices (Schmidt 2000: 56). Therefore the general guidelines presented for understanding the roots of unsustainable socio-ecological development and possible alternatives to balance the tensions must be considered within a particular context, at which point appropriate forms of organisation or social action can be explored. This puts the inquiry into the broad category of
“contextually-sensitive” theory (Thrift in Ibid. 56).
The overall methodological approach is clearly transdisciplinary, and takes into account theories and assertions from the social sciences, natural sciences and humanities. Combining disciplinary knowledge in this way is important, since the problems associated with sustainability (as defined for this investigation) cannot be adequately addressed within a single discipline or even separate disciplines. Transcending disciplinary boundaries in this way allows the problems associated with sustainability to be addressed in a more holistic manner. As Costanza notes, the problem is not with limitations themselves, but of limitations which are dictated by traditional divisions of subject disciplines rather than subject matter. This is not to say that the conventional disciplinary structure is not useful, but rather that a transdisciplinary way of looking at this problem can add important insights and address certain deficiencies apparent in existing approaches (Costanza et al. 1997: 77).
The following sections will present the three theories which are titled: 1) Biophysical Foundation of Economic Activity; 2) Energy Flows in the (Under)Development process; and 3) A Dialectical Territorialist Approach to Political Ecology. The theories will be followed by an examination of the ways in which these thermodynamically based understanding can be applied to address the main elements of sustainability defined for this project. The first part examines the relationship between society and nature, choosing a focus on space and time in order to show the incompatible development of ecological and economic systems, and point to the significance of a thermodynamic perspective for transcending the nature-society divide. The second part turns to examines the North-South relationship, and the importance of the theory of ecologically unequal exchange, based on net flows of energy and materials, for understanding underdevelopment. The last part takes a closer look at the usefulness of a dialectical territorialist approach, and its expanded awareness of space, in order to reveal the hidden forms of power and control within existing socio-spatial structures, and provide a spatial understanding which can empower and unite a wide range of resistances and social movements. Finally, the question, “Can a
biophysically based ecological economics provide an adequate basis for an alternative understanding and style of development?” will be reflected upon in the conclusion. The three applications of an ecological economics approach will be reviewed in terms of their ability to promote ecological stability, social sustainability, and supportive socio-political institutions.
3. Theories
3.1. The Biophysical Foundations of Economic Activity
1. Introduction to biophysical ecological economics
In recent years, there has been growing concern about the way in which economic analysis, as currently practised, is divorced from its biophysical foundations.15 The standard view of the economy can be described as, "an independent, self-regulating and self-sustaining system, whose productivity and growth are not seriously constrained by the environment" (Rees, 1999a: 29). The underlying assumption is that all physical things ultimately consist of the same indestructible matter that is arranged in production, disarranged in consumption, and then rearranged in production. The economy is therefore envisaged as a closed flow from production to consumption to production again, where nothing is used up, only disarranged (Daly and Cobb 1990: 194). This standard view of the economy, as an isolated system, is in stark contrast to a biophysical approach to economics which recognises an intimate connection between the human economy and the natural environment. From this perspective, humans do not simply take out resources from nature or put back waste; rather all consumption and production processes are within nature as are humans themselves. Every activity which produces goods or generates services, can be described as a flow of material and energy which begins in the environment, passes through the humanised territory, and then eventually returns to the environment. The economy in this view can therefore be described as "an inextricably integrated, completely contained and wholly dependent subsystem of the ecosphere" (Rees 1999a: 30).
Biophysical ecological economics thus begins with a conceptual model that sees the economy connected to, and sustained by a flow of energy, materials and ecosystem services. In this view, industrial metabolism can be likened to biological metabolism where, like the internal process of all living systems which maintain themselves by continuously consuming a flow of materials and energy from their environment and discharging the wastes, the economy also consumes energy and materials from nature, converts the useful portion of it into manufactured goods and services, and discharges the wastes (Ibid. 30). It follows that economic transformations, like all such physical processes in nature, must be subject to the laws of physics. This issue has received great
prominence since the publication of Nicholas Georgescu-Roegen’s (1971), The Entropy Law and the Economic Process.
Georgescu-Roegen defines economics as “the study of transformations in matter and energy brought about by human action and entropy” (Georgescu-Roegen in Beard and Lozada 1999: 124). Bioeconomics represents the culmination of his work in economics and thermodynamics. His greatest contribution could be summarised as: 1) pointing out that economics has been too physical in relation to human welfare - that is in assuming human welfare to be a function of production; but 2) not physical enough in terms of the physical nature of the economic process and what is required to sustain it (Lawn 1999: 5). His thermodynamic approach offers a conceptual framework to integrate a description of the human economy and its biophysical surrounding.
Entropy is a central concept for understanding ecological economics, and Georgescu-Roegen is often credited as the first to introduce the entropy concept into economics in a visionary way.16 Entropy can be defined as the physical measure of the decline of usable energy (Faber 1996: 95). The term entropy, and the underlying concept, was introduced by Rudolph Clausius in the nineteenth century to help explain the tendency of temperature, pressure, density and chemical gradients to flatten out and gradually disappear over time. It is the physical law which explains, for example, why an ice cube melts when put in a drink. Entropy is involved in all processes, be it in nature or in economies, and is a quantitative measure for the irreversibility involved in any transformation processes of energy (Ibid. 95). Since it deals with available or useful energy it is, in Georgescu-Roegen’s words, “the most economic of all physical laws”
(Ibid. 105)
2. Thermodynamics and the economic process
The connection between the economy and the ecosphere has considerable implications for sustaining the economic process. In thermodynamic terms, all economic activity involves consumption and invariably contributes to the human load on the environment. By examining the unidirectional and irreversible flows of useful matter and energy from the ecosphere through the economic subsystem and back to the ecosphere in degraded form, thermodynamics can show the outer limits of what is physically and economically possible (Rees 1999a: 31). It is therefore argued by ecological economists, like Georgescu-Roegen, that the first and second laws of thermodynamics must be the starting point for a new approach to economics.
The first law of thermodynamics, also known as the law of conservation of mass/energy, states that mass/energy can be neither created nor destroyed (Ayres 1998: 189). With regards to mass, the law states that mass inputs must
equal mass outputs for every process. The economic implications of this is fairly straight forward, and implies that all resources extracted from the environment must eventually become unwanted wastes and pollutants. This however means, among other things, “that 'externalities' (market failures) associated with production and consumption of materials are actually pervasive and that they tend to grow in importance as the economy itself grows” (Ibid. 190). While materials recycling can help and certainly must play a role, recycling is energy intensive and imperfect, so it cannot fully compensate. With regards to the conservation of energy, the law says that energy inputs must equal energy outputs for any transformation process. This appears to lack practical significance for economics, since it seems to suggest that the use of energy will not reduce the amount of energy available to be used again. This is however not true. The reason for the confusion is that most discussions of energy are really about a certain kind of energy - that is available energy or "low-entropy energy"
- which is not conserved (Ayres 1998: 199).
This reflection leads immediately to the Second Law of Thermodynamics which says that, “although the total amount of energy in an isolated or closed system will remain constant, the energy will tend to dissipate into less useful forms with every physical action or transformation that occurs inside the system” (Ibid.
190). This observation, that energy and matter are transformed in economic processes from a state of highly concentrated and easily available resources into a state of highly dispersed and non-available wastes, led Georgescu-Roegen to the assertion that the economic process is subjected to the Second Law of Thermodynamics. In his words, “the economic process is entropic: it neither creates nor consumes matter or energy, but only transforms low entropy into high entropy” (Georgescu-Roegen 1971: 281). A rise in entropy is associated with a decrease in the quality of energy available for future use, while a fall in entropy is associated with an increase in the quality of energy available for future work. Therefore, in spite of the circular flow model of the economy put forward by conventional economists, there is something permanently used up in the economic process. The stock that is used up refers to ‘low-entropy’ useful materials, such as fossil fuels or high grade metal ores which are dispersed to unusable concentrations over time. The stocks that accumulate include waste products, mine tailings, thermal pollution, and so on. These latter stocks are generally harmful, both to individuals through toxic effects, and to species and ecosystems through the loss of habitat (Rees 1999a: 31).
Daly and Cobb (1990: 195) use the following simple example of burning a piece of coal in order to illustrate the entropy concept:
“When coal is burned, the energy in the coal is transformed into heat and ash, and the amount of energy in the heat and ashes equals that
previously in the coal. But now it is dispersed. The dispersed heat cannot be used again in the way it was originally used. Furthermore, any procedure for reconcentrating this energy would use more energy than it could regenerate. In other words, the dispersal of previously concentrated energy would increase. There is no way of reversing this process. Burning a piece of coal changes the low- entropy natural resource into high-entropy forms capable of much less work.”
This means that in any physical transformation, the quantity of raw materials taken from nature are equal in quantity to the waste materials ultimately returned to nature, but there is a qualitative difference between them. Entropy is the physical measure of that qualitative difference. From this perspective, Rees argues that “the ecologically important flows in the economy are not the circular flows of money but rather the unidirectional and thermodynamically irreversible flows of useful matter and energy from the ecosphere through the economic system, and back to the ecosphere in degraded form” (Rees 1999a: 31).
3. Entropic constraints on economic growth
One of the main economic implications which follows from the second law of thermodynamics is that, since economic processes utilise low-entropy raw materials and discard high entropy wastes, there are definite limits to economic expansion. The second law of thermodynamics says that work may be performed, but only by diminishing the amount of available energy for further work in the future. Energy used in the rearranging and recycling of material building blocks in production, is not itself recycled, and on each cycle some of the building blocks are dissipated beyond recovery. So while matter is not actually consumed, the capacity to rearrange matter is. As Daly notes, “We can do a better or worse job of sifting this low entropy through our technological sieves so as to extract more or less want satisfaction from it, but without that entropic flow from nature there is no possibility of production” (Daly and Cobb 1990: 196).
There are two basic sources of low-entropy energy: the solar, and the terrestrial or stored energy on earth.17 An important difference between the two is their patterns of scarcity. Georgescu-Roegen pointed out that the total energy contained in all the world’s coal reserves amounts to only about two weeks worth of solar radiation (Georgescu-Roegen in Beard and Lozada: 126).
Sunlight, however, is limited in its flow rate to the earth, while terrestrial stocks such as minerals and fossil fuels can be used up at a rate largely of our own choosing. Since people are not able to appropriate sunlight, they exploit terrestrial sources instead. Industrialism with its intensified exploitation of fossil fuels and mineral materials, represents a shift away from dependence on the
relatively abundant solar source of low-entropy matter/energy, to the relatively scarce terrestrial source, in order to take advantage of the expandable flow rate at which it can be used (Daly and Cobb 1990: 196). In fact, the whole history of technological progress can be seen as a continuous substitution away from abundant sunlight toward increasingly scarce mineral resources. Daly notes, that
“it was on the basis of this elementary consideration alone, that Georgescu- Roegen was able to predict, back in the 60’s when most economists were talking about feeding the world with petroleum, that exactly the opposite substitution would happen: we would be fuelling our cars with alcohol from food crops that gather current sunshine”18 (Ibid. 197).
As resources of low entropy are used up, the attempt to substitute them involves a greater expenditure of low-entropy energy and increase of high-entropy energy waste. This is a problem which cannot be overcome by technological means.
Recycling, for example, involves fresh expenditures of energy in order to try and obtain useful energy/materials from a 'disorderly' mixture. But no matter how efficient a recycling process may be, there always remains a residue of waste air, water, and solids that can no longer be changed back into useful energy/materials. This points to the physical truth underlying economic concepts like production and consumption, and leads one to reconsider the real basis of material wealth and economic growth. For example, considering that the energy stored in fossil fuels has been concentrated by plant activity over thousands of years, the idea that consuming such resources yields economic growth seems rather foolish (Lee in Hayward 1995: 110). Likewise, many investments do not increase productive capacity in the physical sense, but rather increase the destruction of non-renewable resources.
Since matter/energy can neither be created nor destroyed, the material basis of all life and production processes is the qualitative difference between natural resources and waste, that is the increase in entropy. The bottom line is that low- entropy energy is necessary for production, and whatever we do, including recycling or the attempt to substitute, devalues energy/matter, and leaves less available for future processes. This scarcity puts limits on economic growth which are not surmountable even in principle. Therefore, based on the second law of thermodynamics, it can be concluded “that scarcity is absolute, not merely relative” (Ibid. 112).
4. Objections to resource scarcity and limits-to-growth
1) Resource substitution argument
The resource scarcity argument already received a fair deal of attention in the 70’s following the publication of the famous Limits to Growth - Report to the Club of Rome (Meadows et al. 1972). The general conclusion reached by neo-
classical economists at that time was that resource scarcity would not limit economic growth in the long run, given continued capital investment and technological progress. In most economic growth models explored, it was assumed that human capital and natural capital (i.e. resources) are inherently substitutable and interchangeable, without limit (Solow; Stiglitz in Ayres 1998:
203). That is, while resources are considered necessary for production, the amount of resources needed for any given level of output can become arbitrarily small, approaching zero, as long as capital or labour are substituted in sufficient quantities (Daly 1996: 53). This implicitly assumes that extra capital and labour can be produced without extra resources. This led some prominent economists to the conclusion that “the world could eventually get along without natural resources” (Solow in Ibid. 53).19
In response, Georgescu-Roegen argued that natural resources are not like other production factor, but rather “are the very sap of the economic process” (Ibid.
53). Human-made capital cannot exist nor reproduce itself without the existence of natural capital. He argued that a change in capital or labour can only diminish the amount of waste in the production of a commodity, but that no agent can create the material on which it works (Georgescu-Roegen in Ayres 1998: 204).
Daly in turn comments that “the neo-classical production function of labour and capital is equivalent to an assertion that it is possible to make a cake with only a cook and a kitchen, but that no flour, sugar or eggs are needed” (Daly in Ibid.
204). The reality however is, that regardless of the level of knowledge, capital requires low-entropy energy.
Nevertheless, some economists continue to argue their case for resource substitution. As a concrete example of the resource-substitution argument, some economists have argued that chemical pesticides are substituting for natural predators, thereby illustrating the point that human-made capital can substitute or provide a service equivalent to that of natural capital/resources (Cleveland and Ruth in Lawn 1999: 6). The point missed, however, is that chemical pesticides themselves require low entropy to be produced which can only be sourced from natural capital and which ultimately end up being absorbed by natural capital in the form of high entropy waste (Ibid. 6). Therefore rather than representing a substitution of human capital for natural capital, it is merely illustrating the preference of one form of natural capital over another. That is, chemical pesticides as humanly transformed natural capital, are being preferred over natural predators as raw natural capital. As Lawn argues, “ultimately, if the low entropy required to manufacture human-made capital does not exist, nor does the perceived human-made substitute” (Ibid. 6)
While a more in depth discussion of production functions or their implications are beyond the scope of this paper, it is of some interest to note that economists
in the late 50’s were not able to adequately explain economic growth per capital in terms of changes in the two factors, capital and labour. Most of the growth in gross domestic product was attributed to “technical progress”, which was essentially identified with increasing factor productivity or just labour productivity (Ayres 1998: 206) Ayres however points out that, “probably by far the largest part of the historical increase of ‘labour productivity’ that apparently drives economic growth is attributable to the vast increase in the exergy [low- entropy energy] flux per unit of human labour, supplied from the outside” (Ibid.
206). That is, low-entropy energy, in combination with machines, has in effect been a substitute for human labour in many sectors, thereby increasing labour productivity and, through linkages with wages and consumption, resulted in economic growth.20
From this perspective, the neo-classical tendency to ignore resources as factors of production means that it is not able to incorporate the basic thermodynamic reality that low-entropy energy is used up in the economic production process, but cannot itself be created or “produced” by human activity. While there is no fixed relationship between the monetary and physical size of the economy, economic growth has always implied correspondingly higher inputs of energy and materials. This connection weakens in advanced or post-industrial societies, though the absolute levels of resources typically consumed by a post-industrial lifestyle remains very high. This brings into question the export of pollution from richer to poorer countries, and the net import of raw materials and energy intensive commodities from poorer to richer countries. A biophysical approach therefore confronts growth theorists with these concerns and weakness.
2) The dematerialised economy alternative
Another response to the resource scarcity argument has been to point out that Georgescu-Roegen and Daly envision an economic system as a materials’
processing system in which final products are necessarily material in nature (Ayres 1998: 204). While this is an accurate description of the economic system as it functions today, it is argued that in the future the economic system need not produce significant amounts of material goods. Ayres points out that in principle, it could produce final services from very long-lived capital goods, with very high information content, and non-scarce renewable sources of energy, such as sunlight. At the end of its useful life, a capital good in this hypothetical economy would be repaired, upgraded and remanufactured, but rarely discarded entirely. Therefore he argues that “there is no limit in principle to the economic output that can be obtained from a given resource input” (Ayres 1998: 204). It follows from this logic that there is no limit, in principle, to the degree of dematerialization that can be achieved in the very long run.
While such an approach does offers an important perspective for reducing material and resource consumption, Daly argues that it “expands a germ of truth into a whale of a fantasy” (Daly 1996: 49). Daly responds to such proposals, which he refers to as the “information reformation”, with the following:
“McDonalds will introduce the ‘info-burger’ consisting of a thick patty of information between two slices of silicon, thin as communion wafers so as to emphasise the symbolic and spiritual nature of consumption. We can also dematerialise human beings by breeding smaller people - after all if we were half the size there could be twice as many of us - indeed we would have to dematerialise people if we were to subsist on the dematerialised GNP! We can eat lower on the food chain, and we can be more resource-efficient, but we cannot eat recipes” (Ibid. 49).
There are fairly obvious technical and economic limits to efficiency in practice - food, cars and TV’s cannot be completely dematerialise. Furthermore, Altvater points out that even a “virtual economy” has a material substrate, that is paper currency and what it represents. Moreover, it needs to be linked to physical communication systems, power supply lines, means of disposing waste products, educational institutions, transport systems, satellites and so on (Altvater 1994:
78). Rees also takes issue with the dematerialised economy alternative, noting that “it is purely a technical response to a systemic crisis, one that ignores social and cultural context and accepts unquestioned the fundamental values of the consumer society” (Rees 1999a: 45). He also argues that it ignores the present barriers, which would need to be overcome in order to seriously initiate action in this direction, such as the current level of public understanding, irreducible scientific uncertainty, the power of vested interests, and the large potential costs associated with required structural adjustments to the economy. Moreover, he notes that history suggests that spontaneous efficiency gains in the economy result in increased profits or lower prices, both of which lead to increased consumption and accelerated resource depletion, which economists call the
“rebound” effect.21 This leads to the realisation that achieving sustainability will require much more than a technological fix.
In short, while the dematerialised economy alternative is theoretically attractive, and will undoubtedly need to play an important role in any future sustainable society, it is not in itself enough to maintain a growing consumer society.
3) Solar energy - the future panacea
Another response to the resource scarcity argument goes on to consider the potential for utilising solar radiation. Ayres notes that the flow of low-entropy energy from the sun is extremely large and certainly adequate to sustain
